I'd like to say that I have a hard time understanding Congress' refusal to fund the bridge loan to the Big 3 automakers. I actually think I do understand. What I have yet to be able to put my finger on is the 'scorched earth' rationale when it comes to the auto industry.
In the movie 'It's A Wonderful Life', there's a line in there that I like to remember regarding ordinary people. George Bailey tells Mr. Potter, "...don't forget its this rabble you talk about who do most of the working and paying and living and dying in this town..."
It's too easy for us to forget this, when great fortunes seem more important than the empty pockets of ordinary people.
We're not talking about the fast food industry, or even certain sectors of the retail industry. Bankruptcy for automakers is not like bankruptcy for the airline industry. Most of us will never own a commercial airplane. Almost all of us own, or are in some way dependent upon automobile transportation. Failure in that area, makes collateral failure a very frightening proposition.
I heard a commentator say over the weekend, that the Chrysler bailout of near twenty years ago didn't work because it cost the American taxpayer money by paying off the loan early! Excuse me?! Didn't the government get any money from taxes on car sales? People who continued to work in the industry as opposed to the lay-offs that would have ensued? Advertising revenue, didn't help the country? Lee Iaccoca's book sales - I mean come on, that bailout didn't work? Seriously?
Maybe we all can stipulate that auto industry executives haven't helped their cause:
The chairmen of the industries flew in to D.C. to beg for money on corporate jets - got it.
The cars that have been made by the automakers catered to worst excesses of their customer base and ignored or resisted efforts at regulation that would have had them produce more fuel efficient cars - you're right.
Foreign auto makers building cars on American soil make a car, on the whole, about $2000 less than American manufactures primarily due to labor costs - OK.
In a free market economy you have to be able to keep up with the competition, otherwise you just lose out - point well taken...
But w are talking about one of the last major manufacturing industries that we have in this country.
I'm not an economist, but here's a question: exactly what will unemployment benefits cost for the 3.5 million workers who would lose their jobs if the automakers went under? In an economy that threatens the prospect of a 9% jobless rate, how would that be helpful?
Another question: how much would cars produced by foreign automakers cost if there were no competition by American auto manufacturers?
According to the head of the UAW, and members of Congress, the sticking point in the bridge loan negotiations, was the fact that the UAW wouldn't guarantee a date certain that they would bring wage demands in line with those of foreign automakers. So the reason Congress couldn't see themselves allocating $14 billion was because of the employees?! Because their representatives couldn't guarantee a date in 'certain' when the employees would take less pay after previous concessions?
The refusal to refuse the bridge loan, goes to a fundamental philosophy regarding who has value in this society. If this philosophy prevails, its going to be awfully hard to pull out of this mess. More than $700 billion was appropriated to financial institutions who have essentially passed money around among themselves - a philosophy that says the presence of these institutions maintain the financial solvency of this country.
Nearly 2 million people have joined the ranks of the unemployed and essentially the Congress took a pass on the prospects of an additional 3 million Americans out of work.
We can go round and round regarding who works and who provides jobs. Until, that is, there's no money to buy the hamburger, the hammer, the wrench or the car - no matter where its made. Then we'll find who this country's MVPs really are.